|Highest Certificate Rates |
|Best Certificate Rates | CD Investments|
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With many people becoming more astute with their finances, more and more individuals search for ways to place their money in stable investments. One of the best vehicles for saving and protecting money is by placing money into certificates of deposit. In order to do that, an individual needs to pay a professional to do the homework or learn how to research the best certificate rates. These rates can be found with municipalities, governments, banks - the options are numerous. If you don't have time to devote to searching and researching rates, it is advisable to pay a professional financial planner to help.
The first place to start looking at rates is a simple internet search. A search in March of 2010 brought out rates as low as 1.15% to 4.3% - but identifying the highest rate is only the first step. After this, an individual must also compare the length of time that the money must be tied up in the institution. These time frames can range from three months to five years. Selecting the interest rate with the right length of time is what makes selecting the best rate for the needs of the individual the difficult process that it is.
In the case above of a 4.3% return - the length required to leave the money untouched at the institution is only six months. However, a 4.0% return can be earned on a five year certificate. If rates improve over the next six months - it might be best to take the higher return in hopes of a more attractive available return when it matures. However, if rates decline, the six month rate might catch the unsuspecting investor short once the six month certificate matures. Although the investor will earn the stated interested for the initial deposit, the money might not earn as much as it would have if locked into a longer rate certificate. Placing money into certificates of deposit is not for the faint of heart. Once the money is locked into a certificate, there are penalties for early withdrawal that can easily cut into the principal amount if it happens during the earliest part of the time frame. Banks rely on the interest that they can make on the amount of money which individuals place into deposit certificates. The bank is paying a portion of that back to the certificate holder. If drawn early, it cuts into the bank's budget and affects their bottom line. They recoup this money, as much as possible by penalizing the early withdrawal.
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